Correlation Between John Bean and Gorman Rupp
Can any of the company-specific risk be diversified away by investing in both John Bean and Gorman Rupp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining John Bean and Gorman Rupp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and Gorman Rupp, you can compare the effects of market volatilities on John Bean and Gorman Rupp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in John Bean with a short position of Gorman Rupp. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and Gorman Rupp.
Diversification Opportunities for John Bean and Gorman Rupp
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and Gorman is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and Gorman Rupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gorman Rupp and John Bean is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on John Bean Technologies are associated (or correlated) with Gorman Rupp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gorman Rupp has no effect on the direction of John Bean i.e., John Bean and Gorman Rupp go up and down completely randomly.
Pair Corralation between John Bean and Gorman Rupp
Considering the 90-day investment horizon John Bean Technologies is expected to generate 1.76 times more return on investment than Gorman Rupp. However, John Bean is 1.76 times more volatile than Gorman Rupp. It trades about 0.24 of its potential returns per unit of risk. Gorman Rupp is currently generating about 0.19 per unit of risk. If you would invest 9,526 in John Bean Technologies on August 23, 2024 and sell it today you would earn a total of 2,392 from holding John Bean Technologies or generate 25.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. Gorman Rupp
Performance |
| Timeline |
| John Bean Technologies |
| Gorman Rupp |
John Bean and Gorman Rupp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and Gorman Rupp
The main advantage of trading using opposite John Bean and Gorman Rupp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, Gorman Rupp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gorman Rupp will offset losses from the drop in Gorman Rupp's long position.| John Bean vs. Small Cap Core | John Bean vs. Freedom Holding Corp | John Bean vs. Gfl Environmental Holdings | John Bean vs. Growth Fund Of |
| Gorman Rupp vs. Standex International | Gorman Rupp vs. Franklin Electric Co | Gorman Rupp vs. Omega Flex | Gorman Rupp vs. China Yuchai International |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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